If interest rates decline, a firm should consider ____ to take advantage of the lower interest rates.
A) selling fixed assets
B) stock sales
C) bond refunding
D) investing in marketable securities

Question

Quizplus · Accepted Answer

When interest rates decline, a firm can benefit from lower borrowing costs by refinancing its outstanding debts at a lower interest rate. This is known as bond refunding. By issuing new bonds with a lower interest rate to pay off the old bonds, the firm can save money on interest expenses over the life of the bonds. Selling fixed assets or investing in marketable securities may not be related to taking advantage of lower interest rates, while stock sales may not be a feasible option for all firms.

If Interest Rates Decline, a Firm Should Consider ____ to Take